"Iron ore, Australia's top export, rose 4.2 per cent to its highest level since the middle of April and yet the Aussie is really struggling.

"There's a little bit of frustration as to why it hasn't performed better.

"It just gives the impression of the northern summer doldrums markets, where a lot of the Japanese are on holidays and it's the same in Europe and the US too."

The Australian dollar also came under pressure following the release of National Australia Bank's July business survey, which showed confidence was at its lowest point since November last year, and trading conditions were at four-year lows.

"It was a pretty lacklustre report and that certainly didn't help the Aussie's cause," Mr Callow said.

At 1200 AEST, the September 10-year bond futures contract was trading at 96.240 (implying a yield of 3.760 per cent), down from 96.305 (3.695 per cent) on Monday.

The September three-year bond futures contract was at 97.380 (2.620 per cent), down from 97.420 (2.580 per cent).